Correlation Between Okta and Bumi Resources
Can any of the company-specific risk be diversified away by investing in both Okta and Bumi Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Okta and Bumi Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Bumi Resources Minerals, you can compare the effects of market volatilities on Okta and Bumi Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Okta with a short position of Bumi Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Bumi Resources.
Diversification Opportunities for Okta and Bumi Resources
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Bumi is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Bumi Resources Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumi Resources Minerals and Okta is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Okta Inc are associated (or correlated) with Bumi Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumi Resources Minerals has no effect on the direction of Okta i.e., Okta and Bumi Resources go up and down completely randomly.
Pair Corralation between Okta and Bumi Resources
Given the investment horizon of 90 days Okta is expected to generate 2.86 times less return on investment than Bumi Resources. But when comparing it to its historical volatility, Okta Inc is 1.21 times less risky than Bumi Resources. It trades about 0.03 of its potential returns per unit of risk. Bumi Resources Minerals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 17,600 in Bumi Resources Minerals on August 28, 2024 and sell it today you would earn a total of 24,600 from holding Bumi Resources Minerals or generate 139.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.56% |
| Values | Daily Returns |
Okta Inc vs. Bumi Resources Minerals
Performance |
| Timeline |
| Okta Inc |
| Bumi Resources Minerals |
Okta and Bumi Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Bumi Resources
The main advantage of trading using opposite Okta and Bumi Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Bumi Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bumi Resources will offset losses from the drop in Bumi Resources' long position.The idea behind Okta Inc and Bumi Resources Minerals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bumi Resources vs. Energi Mega Persada | Bumi Resources vs. Harum Energy Tbk | Bumi Resources vs. Delta Dunia Makmur | Bumi Resources vs. Benakat Petroleum Energy |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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